Russia eases rules on currency purchases as ruble recovers

A view shows Russian ruble coins in this illustrative photo taken March 25, 2021. REUTERS/Maxim Shemetov/Illustration/File Photo

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April 8 (Reuters) – Russia will ease temporary capital controls aimed at limiting the ruble’s decline by allowing individuals to buy foreign currency in cash and will also scrap fees for buying foreign currency through brokerages, the central bank said on Friday.

The ruble rebounded on the Moscow Stock Exchange, rising from record lows in March to levels seen before Feb. 24, when Russia launched what it calls a “special military operation” in Ukraine, as control measures capital stifled the demand for foreign exchange.

The ruble’s rapid rebound has raised concerns about its economic and financial impact, with analysts warning that the volatile and strong ruble could pose a threat to Russian revenues from the sale of raw materials abroad for foreign currency .

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The central bank said banks will be allowed to sell foreign currency in cash to individuals from April 18, but only banknotes they received no earlier than April 9.

The central bank also removes its obligation for banks to limit the spread between the prices at which they offer to buy and sell currencies. But he recommended that banks sell foreign currency to import-oriented enterprises at a rate no more than two rubles above the market rate.

The central bank said individuals will be allowed to withdraw not only dollars but also euros from their accounts from April 11, but kept the maximum amount that can be withdrawn until September 9 at the equivalent of 10,000. dollars.

The ruble’s rapid recovery has raised doubts about the sustainability of its gains. Anyone who tries to buy foreign currency online from a bank in Russia or illegally from a currency exchange, or buys goods and services online denominated in foreign currency will find the real rate considerably worse. Read more

The central bank also said it would scrap a 12% fee for buying foreign currency through brokerages, confirming earlier reports from Tinkoff Bank and Alfa Bank.

“We believe this decision heralds the end of a dizzying rouble rally,” CentroCreditBank analysts said.

In early March, as the ruble fell sharply as the United States and European countries imposed sanctions on Russia for sending troops to Ukraine, the central bank introduced a 30% commission on the purchase of foreign currency for the details. The commission was later lowered to 12%.

Restrictions on the purchase of foreign currency as well as the order given to export-oriented companies to convert 80% of their income into foreign currency helped the ruble regain ground. On Friday, the ruble hit its highest level against the euro since June 2020 and jumped to a 2022 high against the dollar. Read more

The decision to scrap the commission along with the central bank’s decision to cut its key rate to 17% should reduce ruble volatility, VTB Capital analysts said.

Russia’s central bank unexpectedly cut its benchmark rate by 20% on Friday and said further cuts were possible as emergency measures had contained financial stability risk, brought deposits back to banks and helped limit the threat of inflation. Read more

In March, consumer prices in Russia jumped 7.61%, recording their biggest month-on-month increase since January 1999.

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Reuters reporting; Editing by Grant McCool

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